Cruise Leaders Chart Path for Unprecedented Growth

The cruise industry faces immediate challenges that include an industry-wide goal of zero net carbon emissions by 2050. Yet the segment’s success in attracting vacationers has skyrocketed to an unprecedented level, said cruise line leaders gathered this week at the Seatrade Cruise Global conference in Miami Beach.

“For the industry and certainly for us, the demand profile is unprecedented,” said Josh Weinstein, Carnival Corp. & plc’s CEO, during the conference’s “State of the Industry” discussion.

“Our outlook for 2024 [includes] record yields, record demand [and] record passengers carried,” said Weinstein. “And as amazing as that is, our bookings for 2025 are better than they were at this point last year for 2024.”

Indeed, the Carnival chief said cruising has eclipsed its post-pandemic resurgence. “The concept of pent-up demand for cruising is gone,” said Weinstein. “This is natural demand because we all provide amazing experiences.”

Weinstein added that the cruising’s value versus land vacations has increased significantly during the recent leisure travel boom.

The cruise experience versus “what has happened in many, many land-based alternatives is that the service levels today versus before 2020 are not close anymore,” Weinstein said. “It gives us a huge opportunity to really excel and get that incremental demand.”

“We see the [cruise industry’s] strength globally,” said Pierfrancesco Vago, executive chairman of MSC Cruises.

Cruise Bookings Rebound

“[Bookings] are coming back in different parts of the world, with the same logic [of] value for money and the experience we offer our holidaymakers,” he said.

Vago added that the expansion of U.S. homeports in the last several years has also benefited the industry. “Cruises are coming closer to home, and that’s also a facilitator for customers to come and try the experience,” he said.

“We have a lot of newcomers, and this is promising because it looks like the numbers will be on the rise, and obviously the supply will drive the demand,” added Vago.

“For the industry and certainly for us, the demand profile is unprecedented.” – Josh Weinstein, Carnival Corp. & plc. (Photo by Brian Major)

The major cruise lines are showing their confidence in consumers’ desire to cruise via new ship orders that have Carnival, Royal Caribbean, MSC and Norwegian ordering a total of 34 ships collectively in the current decade.

“Demand is incredibly robust, the onboard product is fantastic, and guests are coming back with repeat rates at historically high levels,” said Harry Sommer, president and CEO of Norwegian Cruise Line Holdings which announced an order for eight new ships Monday.

“This gives us an incredible optimism for the future,” Sommer said. “We can continue to [build] larger, more efficient ships that not only help our financial position but also help us deliver world-class experiences to our guests.”

Fuel Forecast

With future passenger growth on the upswing, cruise operators are looking to tackle challenges led by the industry’s stated goal of reaching zero carbon emissions by 2050.

As seminar moderator Anne Kalosh noted, the cruise industry “has gone far in developing new technologies and practices” to reduce greenhouse gas emissions, but, “now it’s down to the fuels."

“There’s still a lot more opportunity for us to continue to evolve all of the technologies that support our ships as well as the infrastructure on land [including] shore power,” said Jason Liberty, president and CEO of Royal Caribbean Group and Cruise Lines International Association (CLIA)’s chairman.

“Fortunately, we have many, many parties here today that help us accelerate ways to reduce the amount of fuel we burn as well as reduce emissions. But that’s only going to solve so much,” said Liberty.

“We need to make sure we have fuel sources that allow us to be able to burn and get to a net zero position, which is the goal of the industry,” he said.

Added Liberty, “We need to know where those fuel sources are going to be, we need to know what they’re going to be, they need to be available to us [and they need to be scalable] and they also need to be affordable.”

Liberty said that the process will take time. “This is a journey,” he said. “We need governmental support, we need the support of many of our suppliers, we need the infrastructure to be in place and we need to know where we’re skating to,” he said.

“With that clarity I’m very confident not just in the industry, but with the maritime cluster we have here today, that we will be able to find a solution to get to a net zero position.”

Cruise lines are additionally challenged to meet the European Union’s own goal of attaining carbon-neutral emissions by 2050, which would apply to cruise operators in European ports.

“The problem is [the European Union] is not doing it in line with the rest of the world,” said MSC’s Vago. “We don’t have a global approach to see how to de-carbonize industries [including] the maritime industry.”

However, Vago endorsed the European mandate as “It will be a good benchmark for the rest of the world to understand what is coming up.”

“It occurred to us how many regulations there that govern the cruise industry,” said Norwegian’s Sommer. “If we were to focus on the goal as opposed to mandating specific steps, we would reach that goal much easier and in a much quicker process,” he said.

“We perhaps need to take a slightly longer-term approach to this with governments,” said Sommer, “[to] partner with us to truly accomplish our goal of decarbonization.”

The environmental goals may impact cruise itineraries, said Carnival’s Weinstein. “A cruise ship is like driving your car. If you go slower and you go shorter distances, generally speaking, you use less fuel and you emit less greenhouse gases,” he said.

“To some extent, that is a component of how we are going to continue to reduce our emissions footprint. But ultimately, we are a business, and sustainability is not just about environmental impact,” added Weinstein.

“The concept is about how do you get there in a way that businesses can be sustained,” he added. “Everything we do has to be a balance.”

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